Kindred Completes Refinancing of Existing Secured, Unsecured Debt

Kindred Healthcare, Inc. announced that it has completed the refinancing of its existing debt with $2.25 billion of secured and unsecured debt.

The company announced that it has closed its previously announced offering of $500 million aggregate principal amount of 6.375% senior unsecured notes due 2022 (the “notes”) at an issue price of 100%. Kindred intends to use the net proceeds from the sale of the notes and borrowings under its senior secured credit facilities to redeem its outstanding $550 million of existing 8.25% senior unsecured notes due 2019 and to satisfy and discharge the related indenture.

In addition, Kindred also announced that it has completed the amendment and restatement of its existing senior secured term loan facility (the “Term Loan Facility”) and its senior secured asset-based revolving credit facility (the “ABL Facility”).

The Term Loan Facility was increased to $1 billion and the maturity of the Term Loan Facility was extended by two years to 2021. Among other changes, the interest rate for the Term Loan Facility was also reduced 25 basis points to LIBOR plus 300 basis points. Proceeds from the Term Loan Facility were used to repay the existing term loans and repay the company’s existing borrowings under the ABL Facility. Kindred also intends to use a portion of the proceeds from the Term Loan Facility for the redemption of its existing 8.25% senior unsecured notes due 2019 and the satisfaction and discharge of the related indenture.

The maturity of the ABL Facility was extended by one year to 2019 and, among other changes, the interest rate on the ABL Facility was reduced by 50 basis points to LIBOR plus a spread depending on utilization.

In connection with the refinancing, the company also entered into an interest rate swap agreement to hedge its floating interest rate on an additional $400 million of the outstanding debt under the Term Loan Facility. The interest rate swap has an effective date of April 9, 2014, and expires on April 9, 2018. The company is required to make payments based upon a fixed interest rate of 1.867% calculated on the notional amount of $400 million. In exchange, the company will receive interest on $400 million at a variable interest rate that is based upon the three-month LIBOR rate, subject to a minimum rate of 1.00%. With this transaction, the company has a fixed rate on approximately two-thirds of its funded debt.